SBI directed to pay Rs 30,000 to govt official for wrongly blocked credit card

In May 2000 Krishna Kumar, a senior government official got a rude shock, after having a pleasant dinner evening with his family at the time of payment of bill he came to know that his credit card has been put on a high alert. When Kumar gave his credit card for the payment of the bill at the restaurant after the dinner, the restaurant manager told him that his credit card has been put on a high alert, listed as a ‘pick up card’ by his bank and would have to be seized.

When Kumar, a legal adviser with the Ministry of Law verified with the bank authorities about his credit card he was embarrassed to learn that the State Bank of India to “prevent an anticipated misuse by any third party” had indeed blocked his card.

However the ‘assumption’, proved to be costly for the bank when the State Consumer Commission took it to task in its recent order and directed SBI to pay a sum of Rs 30,000 as compensation to Kumar.

Expressing the act as the “grossest kind of deficiency in service”, Justice J D Kapoor, president of the commission, disproved the bank’s plea that it had done so to prevent misuse of the card. Justice Kapoor added, “It was obligatory on part of the service provider to immediately inform the card holder that his card was being blocked.”

The commission observed that “deficiency” of service on part of the bank can clearly be seen from the fact that the bank officials had “not verified” whether the card was in possession of the actual cardholder.

“Although the card was blocked to protect the interest of the customer, such actions are not advisable and it is incumbent upon the bank to inform the customer immediately, so that he can arrange for an alternate source of cash,” the commission noted.

Later Kumar sent a legal notice to SBI claiming damages and then approached the State Commission for redressal. In his complaint he stated that he was yet to get his card back from the authorities.

On the other hand bank on its part gave a statement that it had blocked the card in April the same year, as it had received three requests from an airline to verify a transaction that had been attempted by the cardholder.

The airline had informed that the transaction was beyond the permissible credit limit on the card. Therefore, foreseeing that a third party or the card holder himself was trying to make an “unauthorized transaction”, the authorities blocked the credit card. The bank authorities further added that it had attempted to contact Kumar via phone and courier, although it was unable to present any printed records of the above.

Disapproving the bank’s claims, Justice Kapoor directed it to pay the compensation, considering the “mental agony, humiliation, and loss of reputation” suffered by the complainant.

“The credit card has still not been returned to the complainant, who amounts to further deficiency in service on part of the bank,” Justice Kapoor added, instructed the bank to pay the sum within a month from receiving the order.

'RRBs’ can play a significant role in financial inclusion

Speaking at a day long seminar of State Bank of India in Mumbai, K J Taori, general manager, agri business unit, said the regional rural banks (RRBs) have an important role in the real last mile financial inclusion. He said their role can be of greater importance then the scheduled commercial banks (SCBs) in achieving the goals of financial inclusion.

The seminar, titled as ‘Charting a roadmap for IT-enabled financial inclusion’ was held by Frost & Sullivan and was presented by Atom in association with The Financial Express on Thursday.

Taori said RRBs will be able to do all this only when they are technologically upgraded and other requirements are met by the government as well as banks sponsoring them. He added that that all RRBs should be given financial support so that they can actively participate in the financial inclusion program. Taori pointed out in actual the RRBs’ requirement is dual which include upswing and downswing.

Speaking on the similar lines, Anandi Lal, general manager, priority sector and RRB, Dena Bank, added that RRBs can have even a greater role in financial inclusion than SCBs who are responsible for their sponsorship. But, technology should be different for the things like collection, deposits and advances for RRBs, said Lal stressing on the need for the speedy computerization of all RRBs.

Mukund L Abhyankar, chairman, The Cosmos Co-operative Bank outlined that even as customer education was the need of the hour, but connectivity is definitely a problem for smooth functioning of biometric cards in rural areas.

However, he appreciated the recent guideline issued by the Reserve Bank of India directing banks not to levy any charge for transactions through ATMs in future.

Addressing the reporters on the sidelines of the seminar, Shyamal Acharya, SBI chief general manager, rural business, said that his bank is planning to offer credit products through its no-frills accounts.

“Also, SBI is looking to mobilize more deposits in such accounts to enhance business viability of its rural banking/ financial inclusion operations,” said Acharya.

During the current fiscal year SBI will be opening around 1,000 branches in the rural and semi urban areas.

State Bank of Hyderabad merger likely to be cleared by banking major

State Bank of Saurashtra (SBS) merger with the parent State Bank of India (SBI) has reached the last lap it is expected that the banking major is likely to clear decks for the merger of another associate bank - State Bank of Hyderabad (SBH).

Sources have all the information of the developments said that merger is expected it is only matter of time.

The sources informed, “SBS is going to establish the model for the merger of other associate banks. For any bank, it’s human resource integration that’s the most important. Even in the case of SBS, that issue still remains unresolved. Once solved, it can be replicated for other banks”.

Probably it will take another three months for SBI to resolve the HR issues in SBS.

SBI is working on Project SHIP signaling for the merger of sequence of associate banks in the near future.

SHIP is short form for four associates — State Bank of Saurashtra, State Bank of Hyderabad, State Bank of Indore and State Bank of Patiala.

“We know its coming. Though finance minister P Chidambaram has assured the unions that no merger proposal would be taken up without a thorough consultative process, things seem to be moving fast in favour of SBI,” Harsha Vardhan Madabhushi, SBH’s director, said. Nowadays sbi car loan scheme is becoming popular as of the low interest rates and easy repayment facility available.

Harsha Vardhan said, the decisions are being automatically certified by the government as they being observed as the bank’s internal issues.

“The unions are not able to digest the deviation from the commitment. There is a plan for indefinite strike starting sometime in September 2008 against the merger proposal,” Madabhushi said.

Indore and Patiala are among the unlisted bodies of seven associate banks of SBI.

Therefore the merger process becomes easy for the SBI since it can be done through a board resolution.

“All the four banks are wholly owned subsidiaries directly controlled by SBI. There is no need for any AGM and the merger decision can be taken anytime after convening a formal meeting of the boards of directors,” a source said.

SBH was established in 1941 by the erstwhile Nizam of Hyderabad, the SBH came into SBI’s control after the Subsidiary Banks Act came into effect in 1959.

Earlier bank used to look after Nizam’s central bank managing the Osmania Sikka and the treasury, with time bank has grown into an institution with about 12,671 employees and over 1,000 branches.

The bank’s branches still take care of the population in the erstwhile Nizam’s region of parts of Telangana in Andhra Pradesh, Karnataka and Maharashtra.

By the end of the quarter ended on June 2008, the bank’s total income was at Rs 1,369.87 crore including an interest income of Rs 1,226.49 crore and a profit of Rs 55.82 crore.

By the end of the fiscal year March 2008, the bank had earned an income of Rs 5,080.29 crore and net profit of Rs 556.99 crore. Currently SBH is having an equity base of Rs 17.25 crore.

SBI general insurance biz final stage set

State Bank of India country’s largest lender is venturing into general insurance business. Almost all the formalities have been fulfilled and by the next month the bank will be finalizing the terms for joint venture with Insurance Australia Group (IAG).

a senior SBI official informed, "We are currently working on the structure of the joint venture agreement. We expect to finalize the operating structure by September. Once a mutual agreement is reached, the new company is expected to get operational in the next three to six months".

An agreement was signed between SBI and IAG in May this year to form a new company for the planned insurance business. According to the agreement, State Bank will be holding a 74 per cent stake in the entity and the rest 26 per cent will be of Australian partner. However State Bank officials, refused to give the details of the financial terms and management structure of the proposed joint venture company.

It is being expected the SBI's entry into general insurance will increase competition amongst the existing players. At present public sector United India Insurance, New India Assurance, Oriental Insurance and National Insurance are the major share holders of the business. While in the private sector leading players are Bajaj Allianz, ICICI Lombard, IFFCO-Tokio General Insurance and Reliance General Insurance.

Government-run State Bank is making aggressive plans for the expansion of the business on various fronts, including custodial business. Although the bank wanted to form a JV with French financial-services Major Societe Generale, a Finance Ministry official informed that the Government was not in favor of the deal.

RBI scanning seven more SBI branches for fake currency

The Reserve Bank of India (RBI) is scanning seven more branches of the State Bank of India (SBI) after fake notes with a face value of Rs 1 crore were recovered from the currency chest of its Domariyaganj branch in eastern Uttar Pradesh.

Officials said an RBI team is scanning branches where the money was supplied from the Domariyaganj branch.

Bank manager Dashrath Cirgainya said the currency chest had about Rs 184 crore and the bank branch supplies cash to smaller branches of the district and the neighbouring districts.

The RBI team raided the bank Aug 4 after the arrest of its cashier Sudhakar Tripathi.

Tripathi on Thursday confessed to the police that he had exchanged fake currency of nominal value of Rs 1.5 crore with the original ones in the bank's currency chest.

The scam being probed by the Special Investigation Team (SIT) of the state police was Saturday recommended to the Central Bureau of Investigation (CBI).

A CBI official confirmed that the agency would start investigation as soon as it receives an official request from the Uttar Pradesh government. What an amazing rewards point and cashback offers at SBI Credit Card but for few luck customers so don't miss the adventure!

"Looking at the intensity of the case, a joint director rank official is likely to probe the case," a CBI source confirmed.

The SIT team led by Superintendent of Police Anil Kumar met RBI officials Saturday.

"The SIT will carry on the investigations until the CBI takes over the case," Kumar said.

The police officials fear a fake currency racket involving a staggering Rs 50 crore might be thriving in the regions of Uttar Pradesh bordering Nepal.

State Bank of India launches debit card in Canada

State Bank of India (SBI) has launched its first debit card in Canada to raise its client profile here.

SBI is also looking at 84 locations globally to increase its association with international business, chairman O.P. Bhatt said Wednesday while launching the card here.

With seven branches across Canada, the State Bank of India-Canada (SBIC) - SBI's 100 percent-owned subsidiary - claims to have captured 65 percent of the trade conducted between that country and India.

The debit card will allow cash withdrawal at all cash vending machines at SBIC branches, and will be accepted in the US and around the world, including India where the SBI has 14,000 automated teller machines (ATMs).

SBIC clients will also get access to other ATMs around the world displaying Interac, Cirrus and Maestro symbols.

Additionally, the debit card can be used for purchases from merchant members in Canada, the US and other countries.

"The debit card will provide our clients with access to their money around the clock and around the world," said SBIC president and chief executive Arun Nagaranjan.

Unveiling the debit card at a gala dinner Wednesday night, Bhatt, who had flown in from India, said the launch completed SBI's product profile in Canada 26 years after it started operations here.

With the Indian economy growing at a rate of about nine percent and its exports and imports increasing by 20 to 25 percent annually, the SBI chairman said his bank was ready for increasing its global presence to meet demands of its business clients.

"Till last year, our international business contributed seven percent to our balance sheet, and about seven percent of our profits. This year, it went up to 10-11 percent. We want to raise this figure to 25 percent in the next five years," he said.

Bhatt said SBI had to expand outside India as 50 percent of business houses engaged in international business banked with it. Now it's very easy to get the information about cashback offers, reward points of sbi platinum credit card and also their hidden terms & conditions.

"Since we are the largest financial service provider in India, we have to go where our clients do business. We are looking at 84 locations around the world to increase our engagement with international business," he said.

Bhatt said SBIC, despite being a 100 percent-owned subsidiary, was actually a Canadian bank as it was incorporated here. "Thus, it enjoyed all the advantages of a Canadian bank and the advantages of its parent bank - the SBI," he said.

"The bank has already captured about 65 percent of the total trade between India and Canada. But given our advantages, we would like to capture a larger percentage."

The second area for business abroad, Bhatt said, involved capturing the non-resident Indian (NRI) segment - whether it is their remittances or their local businesses.

"Increasingly, SBI is offering facilities of banking transactions for NRIs to meet their requirements such as buying a house in India," he said.

The third area of thrust for the SBI in its bid to expand global operations was to increase its operations in the retail and corporate sector.

Bhatt also said SBI planned more branches in Canada, possibly next year

SBI recovers Rs 2,000-cr bad loan

State Bank of India (SBI) is likely to report an improvement in its asset quality when it presents its first quarter results. According to top SBI sources, the bank has recovered bad loans worth around Rs 2,000 crore during April-June 2008.

Top SBI executives, when contacted, refused to comment. SBI managing director SK Bhattacharyya said: “We can’t divulge details before the first quarter results announcement.”

SBI’s credit quality had deteriorated during 2007-08, as it booked fresh bad loans worth Rs 2,700 crore, mainly on account of retail loans, and to some extent, mid-sized corporate loans. As on March 31, 2008, the bank had gross non-performing assets (NPAs) of Rs 12,837 crore compared with Rs 9,998 crore, a year back.

“On the other hand, the bank is slated to make a provision of around Rs 1,000 crore against mark-to-market (MTM) losses of its investment,” an SBI official said on conditions of anonymity. Out of this sum, around Rs 700 crore is expected to be provided for against depreciation of bonds the bank received from the government on account of its rights issue.

Banks are booking MTM losses against depreciation of bonds and equity investments during April-June 2008 period. Nevertheless, SBI is expected to clock double-digit growth in the first quarter to June 30, 2008 over the corresponding period a year back. This is despite the fact that demand for loans from sectors like commercial real estate and auto has slowed down.

Coming back to SBI’s bad loan management, government’s debt waiver-cum relief scheme would help SBI reduce its bad loans by another Rs 2,000 crore. SBI has waived overdues of around 25 lakh farmers, aggregating about Rs 7,000 crore. “It’s estimated that around 30% of the total waived sum had become NPAs,” another SBI insider indicated. Gross NPA stood at 3.04% as on March 31, 2008 while the net NPA stood at 1.78%.